“Innovation is the new competitive advantage.” There’s no doubt that striving for change and creating new value is the driving force in a rapidly evolving logistics and supply chain management sector, writes Jason Whitworth is an M&A partner at BDO LLP.
Industry leaders are increasingly focussing investment on technology to drive efficiencies, with wider use of AI and big data in supply chain processes, and the introduction of more automation, including warehouse automation, autonomous vehicles and 3D printing.
The role of technology is not only influencing how businesses are operating, as they strive to optimise operational performance to improve margins; it’s also shaping decisions being made by investors, who are increasingly being attracted to those businesses willing to push boundaries and innovate in response to a changing market. Venture capital investors are clearly betting on future industry leaders and investing in next generation technology, as they look to tap into transformational businesses in search of the ‘next big thing’.
You don’t have to look hard to find those businesses. Tech has consistently dominated equity investment interest over the last two years – whether that’s data analytics solutions, or workflow productivity.
Unsurprisingly, in the first quarter of the year 42% of deals were tech related. In particular, investment activity within the robotics and the drone delivery operations sector is starting to gain real momentum. Albeit in its infancy, there is an argument that drone technology is paving the way for a revolution in delivery services, offering a sneak peek at a future where speed, efficiency and accessibility are dramatically enhanced.
What are we seeing in the market?
The futuristic approach by certain businesses, combined with a growing appetite from investors, is being evidenced in the deals market – namely the European Innovation Council Fund’s investment in Dronamics, a company at the forefront of advanced drone delivery logistics. Furthermore, Skyports Infrastructure was sold to ACS, a Spanish-based construction and infrastructure development company. Skyports is an infrastructure company which leverages drone service technology to facilitate business logistics through critical data capture. The two deals alone indicate the direction of travel.
But it doesn’t end there. Wincanton, the last UK-listed logistics firm, has continued its interest in automation. Its acquisition of Invar Group, the provider of warehouse execution software, automation and control, will accelerate Wincanton’s warehouse solutions, robotics and automation offering.
When you add Charac’s acquisition of Pro Delivery, the prescription delivery management system; VC investment in Packfleet, an e-commerce logistics operator; as well as FinMile Logistics’ investment in Urb IT, Swedish provider of online shopping delivery software; then you can begin to see a strong pattern emerging.
A shift in gears
The volume and range of tech-related deals demonstrates a shift in behaviour in the logistics and supply chain sector. The likes of robotics, automation and cloud services are increasingly playing an important role in improving efficiency and driving down costs and that’s not going unnoticed by cash-rich investors with capital to spare.
While the quest for innovation is key, the challenges of the last few years have also played their part. Supply chain disruption, geopolitical events, and financial instability, have made many businesses reassess how they do things – and technology has increasingly been seen as the answer.
There is also a strong strategic element at play. In a volatile market, mergers and acquisitions give companies the competitive edge and resilience they need and investors are more than willing to seize on opportunities to fund those growth plans in what remains a highly fragmented sector.
So, what are we likely to see in the deals market in the next 12 months? The speed of technology and innovation has already had a significant impact on the sector in recent years, whether that’s route planning optimisation, big data optimisation, battery-powered vehicles, and warehouse automation, to name but a few. The industry, and the environment, can only benefit in the long term from the continued rate of change and positive customer experience this can deliver, which in turn will drive deal activity.
A shift in mindset will also influence what moves around in the market. Logistics is no longer seen as merely a cost-sink or necessary overhead. It’s become a service—led, value proposition that is attracting more and more attention. As the standing of the industry increases, alongside its capabilities to support high demand, shorter lead times and higher productivity, that ‘thinking outside the box’ approach will only help to stimulate market activity and continue to drive tech-led deals in an industry that refuses to stand still.
Jason Whitworth is an M&A partner at BDO LLP – an accountancy and business advisory firm
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GUEST COMMENT Innovation is driving change in logistics sector
Katie Searles
“Innovation is the new competitive advantage.” There’s no doubt that striving for change and creating new value is the driving force in a rapidly evolving logistics and supply chain management sector, writes Jason Whitworth is an M&A partner at BDO LLP.
Industry leaders are increasingly focussing investment on technology to drive efficiencies, with wider use of AI and big data in supply chain processes, and the introduction of more automation, including warehouse automation, autonomous vehicles and 3D printing.
The role of technology is not only influencing how businesses are operating, as they strive to optimise operational performance to improve margins; it’s also shaping decisions being made by investors, who are increasingly being attracted to those businesses willing to push boundaries and innovate in response to a changing market. Venture capital investors are clearly betting on future industry leaders and investing in next generation technology, as they look to tap into transformational businesses in search of the ‘next big thing’.
You don’t have to look hard to find those businesses. Tech has consistently dominated equity investment interest over the last two years – whether that’s data analytics solutions, or workflow productivity.
Unsurprisingly, in the first quarter of the year 42% of deals were tech related. In particular, investment activity within the robotics and the drone delivery operations sector is starting to gain real momentum. Albeit in its infancy, there is an argument that drone technology is paving the way for a revolution in delivery services, offering a sneak peek at a future where speed, efficiency and accessibility are dramatically enhanced.
What are we seeing in the market?
The futuristic approach by certain businesses, combined with a growing appetite from investors, is being evidenced in the deals market – namely the European Innovation Council Fund’s investment in Dronamics, a company at the forefront of advanced drone delivery logistics. Furthermore, Skyports Infrastructure was sold to ACS, a Spanish-based construction and infrastructure development company. Skyports is an infrastructure company which leverages drone service technology to facilitate business logistics through critical data capture. The two deals alone indicate the direction of travel.
But it doesn’t end there. Wincanton, the last UK-listed logistics firm, has continued its interest in automation. Its acquisition of Invar Group, the provider of warehouse execution software, automation and control, will accelerate Wincanton’s warehouse solutions, robotics and automation offering.
When you add Charac’s acquisition of Pro Delivery, the prescription delivery management system; VC investment in Packfleet, an e-commerce logistics operator; as well as FinMile Logistics’ investment in Urb IT, Swedish provider of online shopping delivery software; then you can begin to see a strong pattern emerging.
A shift in gears
The volume and range of tech-related deals demonstrates a shift in behaviour in the logistics and supply chain sector. The likes of robotics, automation and cloud services are increasingly playing an important role in improving efficiency and driving down costs and that’s not going unnoticed by cash-rich investors with capital to spare.
While the quest for innovation is key, the challenges of the last few years have also played their part. Supply chain disruption, geopolitical events, and financial instability, have made many businesses reassess how they do things – and technology has increasingly been seen as the answer.
There is also a strong strategic element at play. In a volatile market, mergers and acquisitions give companies the competitive edge and resilience they need and investors are more than willing to seize on opportunities to fund those growth plans in what remains a highly fragmented sector.
So, what are we likely to see in the deals market in the next 12 months? The speed of technology and innovation has already had a significant impact on the sector in recent years, whether that’s route planning optimisation, big data optimisation, battery-powered vehicles, and warehouse automation, to name but a few. The industry, and the environment, can only benefit in the long term from the continued rate of change and positive customer experience this can deliver, which in turn will drive deal activity.
A shift in mindset will also influence what moves around in the market. Logistics is no longer seen as merely a cost-sink or necessary overhead. It’s become a service—led, value proposition that is attracting more and more attention. As the standing of the industry increases, alongside its capabilities to support high demand, shorter lead times and higher productivity, that ‘thinking outside the box’ approach will only help to stimulate market activity and continue to drive tech-led deals in an industry that refuses to stand still.
Jason Whitworth is an M&A partner at BDO LLP – an accountancy and business advisory firm
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